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Debt relief can provide a lifeline for consumers who are struggling with unmanageable debt burdens. With household debt at record highs, more Americans are looking into programs that may help them get out from under their loans and credit card balances But not everyone will qualify for relief – you typically need to meet strict criteria based on your finances and the rules of the specific debt relief program
Overview of Debt Relief Options
There are various forms of debt relief available in 2025
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Debt consolidation loans allow you to roll multiple debts into one new loan with a fixed rate. This can simplify payments, but you need a credit score of at least 620 to qualify.
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Debt management plans administered by credit counseling agencies can lower your interest rates and consolidate debt into one payment. You’ll generally need at least $5,000 in debt and regular income to cover the new payment.
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Debt settlement involves negotiating with creditors to pay a portion of what you owe. You typically need at least $10,000 in debt and to demonstrate hardship. This will hurt your credit score.
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Bankruptcy legally eliminates or restructures debts through Chapter 7 or Chapter 13. You must meet income limits and pass a means test to qualify.
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Credit card hardship programs can potentially lower interest rates or monthly payments if you face financial struggles. You need to contact your issuer directly.
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Student loan forgiveness may be available if you consistently make payments through income-driven repayment plans. This only applies to federal loans.
Specific eligibility terms depend on the program. Next we’ll look at qualification criteria for some common situations.
Who Qualifies for Student Loan Forgiveness?
If you have federal student loans, relief may be possible through:
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Public Service Loan Forgiveness – If you’ve made 120 payments while working full time for a nonprofit or government agency, the remainder of your balance can be forgiven after 10 years.
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Income-driven repayment plans – Remaining balances can potentially be forgiven after 20-25 years of consistent payments based on your income.
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Teacher Loan Forgiveness – If you’ve taught full time for five consecutive years in certain schools, you may qualify for up to $17,500 in forgiveness.
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Perkins Loan Cancellation – Teachers, nurses, military members and other public servants can have Perkins Loans forgiven after 5 years of service.
You’ll need to submit an application and documentation to confirm your eligibility. Private student loans don’t qualify for federal forgiveness programs.
Who Is Eligible for Tax Debt Relief?
If you owe back taxes to the IRS, two possible options for relief include:
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Offer in Compromise (OIC) – You settle your tax debt for less than the full amount owed. You must prove financial hardship based on income, assets, expenses and ability to pay.
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Repayment plan – The IRS may allow you to repay over an extended timeframe like 6-72 months. You get more time but must still pay the full debt plus penalties and interest.
Eligibility is evaluated case-by-case. Be prepared to share financial documentation to help prove your situation warrants relief.
Who Qualifies for Mortgage Debt Relief?
While lenders won’t forgive your mortgage, some options like forbearance, refinancing or loan modifications could make payments more affordable:
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Forbearance – Your lender agrees to temporarily reduce or suspend payments while interest still accrues. You need to prove hardship.
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Refinance – If your credit score is sufficient, you may qualify to refinance for better terms. This can lower payments but adds costs.
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Modification – Based on your situation, the lender may extend repayment terms or reduce the interest rate to lower payments.
You’ll need to contact your servicer to see if you meet eligibility requirements. FHA borrowers may also qualify for relief programs like special forbearance.
Who Is Eligible for Credit Card Hardship Programs?
Credit card hardship programs aren’t guaranteed, but can provide relief if you’ve had an income disruption. Potential options may include:
- Lower interest rates
- Waived late fees
- Reduced minimum payments
- Temporary pause on payments
To qualify, you’ll likely need to provide documentation proving financial hardship like medical bills or job loss. Your account will generally need to be in good standing or less than 90 days delinquent.
Eligibility varies by issuer. Contact your credit card company directly to see if hardship assistance is available and check their specific terms.
Who Qualifies for Medical Debt Relief?
If excessive medical bills are overwhelming your finances, explore these options:
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Nonprofit hospitals – Ask if they offer financial assistance or charity care programs based on income.
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Medical credit cards – These let you pay off care over time potentially at 0% interest. You’ll need to qualify based on credit.
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Nonprofit groups – Organizations like RIP Medical Debt provide relief by negotiating and buying medical debt.
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Payment plans – Many providers offer interest-free payment plans to split costs over months.
Eligibility for medical debt relief depends on your individual situation. Be prepared to share financial documentation and account status to determine if you qualify.
Key Takeaways on Debt Relief Eligibility
The bottom line is that debt relief programs typically have strict requirements based on your finances, credit, income and outstanding debt amounts. Key things to keep in mind:
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Not all debts qualify for relief or forgiveness – focus on options for your specific situation.
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Federal student loan borrowers have more potential relief options, including after a set number of income-based payments.
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Mortgage and auto lenders won’t forgive your loan, but may offer ways to lower payments temporarily or permanently.
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Credit card and medical debt relief will require proving financial hardship to qualify.
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Your credit, assets, expenses, and ability to pay will determine if you’re eligible for tax or other debt settlement.
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Bankruptcy legally wipes out debt but has serious long-term credit impacts and income requirements.
Thoroughly research any debt relief solution before pursuing it and understand any credit score or other implications. For the best chance of approval, be ready to provide detailed documentation that proves your qualifications. With persistence and patience, the right debt relief program could help you regain financial control this year.
How debt forgiveness works
Debt forgiveness is when a lender or creditor agrees to wipe out all or part of a debt. You may be able to apply if you have unsecured debts, like credit cards, student loans or tax debt. Medical debts and mortgages may also qualify for some types of relief.
“Consumers can request debt forgiveness directly by contacting their creditors, providing detailed documentation of their financial hardship, and negotiating terms for debt relief,” says Josh Richner, Founder and Senior Debt Advisor at FaithWorks Financial.
Lenders aren’t obligated to wipe out your debts, however. Even if you meet the conditions, the process and how much debt they’ll eliminate depend on the lender and the type of relief. You may need to contact your lender directly to see what’s available and how their process works.
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Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
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At Bankrate, we take the accuracy of our content seriously.
“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Their reviews hold us accountable for publishing high-quality and trustworthy content.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
National Debt Relief Program Explained
FAQ
What qualifies you for debt relief?
Credit card debt
You’ll generally need proof of financial hardship to qualify. This may include a medical emergency or loss of employment. Reach out to your card issuer to see what’s available and their requirements. If your credit card company doesn’t offer a hardship program, there are alternatives.
What evidence do I need for a debt relief order?
This can be your last 2 months payslips, a benefits letter or a bank statement. If you are sending bank statements, please circle the relevant information. Please make sure you include any gas, electricity, water, rent arrears, council tax arrears and benefit overpayments.
How do I know if I qualify for debt forgiveness?
If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.
Is there really a debt relief program from the government?
When it comes to credit card debt relief, it’s important to dispel a common misconception: There are no government-sponsored programs specifically designed to eliminate credit card debt. So, you should be wary of any offers claiming to represent such government initiatives, as they may be misleading or fraudulent.